DONNELLY GROUP RESIDENTIAL PROPERTY

​RESIDENTIAL PROPERTY OVERVIEW​Over the past three decades the Donnelly Group has been actively involved in residential and commercial property development in Australia.

Starting originally renovating houses and small commercial offices in the inner suburbs of Melbourne and later progressing to medium density projects and multi storey commercial buildings in major capital cities of Australia.

2016 AUSTRALIAN PROPERTY MARKET OUTLOOK

Steady economic growth but with divergence in performance across geographies and industries has resonated through to Australian property sectors. Sydney and Melbourne recorded the strongest property performance in 2015 - a trend we expect to continue in 2016 but notably with some improvement in Brisbane and stability in Perth.

The impact of lower interest rates is being directly felt in the retail and residential property sectors, while further downstream benefitting office and industrial. The lower AUD will increasingly factor into investment and consumption decisions, improving the economy at a broad level.

Increased offshore demand punctuated investment markets in 2015 with Australia’s higher interest rate / yield structure supporting attraction of capital to all sectors. The improved prospect for rent growth in most sectors is supportive of the investment outlook as it provides potential for capital value stability (rather than decline) in an environment of rising debt costs and higher required returns, which we expect will emerge later in 2016.

COMMERCIAL PROPERTY MARKET

Demand for office space across major Australian markets is on the rise in 2016. According to the latest Office Demand Index, a total of 507,799sqm of demand was recorded in Q1 2016 – a 33% increase from Q4 2015.

Large businesses looking for more than 3,000sqm of office space accounted for over 50% of the total area enquired for in Q1 2016, while representing just 9% of the total number of enquiries, by volume. Small businesses looking for 1,000sqm or less accounted for almost 80% of the total number of enquiries recorded in the first quarter this year.

MELBOURNEThe past 12 months have seen investor demand surge in Melbourne’s suburban market, driving a sharp contraction in yields. With interest rates, both in Australia and across many markets globally at historically low levels, a flight to income has resulted, with domestic and foreign investors in search of higher yielding opportunities. Melbourne’s suburban yields remain high in both a domestic and international context, so strong demand over the short to medium term is unlikely to waver.